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SunTrust (STI) Rewards Shareholders With 12% Dividend Hike

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SunTrust Banks, Inc.’s (STI - Free Report) board of directors approved a 12% hike in the quarterly common stock dividend. The revised quarterly dividend is now 56 cents per share, up from the prior payout of 50 cents. This dividend is payable on Sep 16 to shareholders of record as of Aug 30.

Since 2013, SunTrust has been raising its dividend annually. Prior to this hike, the company hiked its dividend by 25% (from 40 cents to 50 cents per share) in August 2018.

We remain optimistic about SunTrust’s potential to continue enhancing shareholder value, driven by its strong cash generation capabilities.

In the biggest bank deal since the 2007-2009 financial crisis, the company will be acquired by BB&T Corp for $66 billion in an all-stock merger.

Per the terms of the deal, BB&T shareholders will own roughly 57% and SunTrust shareholders will own around 43% of the combined entity. Moreover, SunTrust shareholders will receive a 5% increase in their dividend upon the completion of the deal.

Notably, given SunTrust’s exemption from the Federal Reserve's annual stress tests in accordance with the Economic Growth, Regulatory Relief and Consumer Protection Act of 2018, the company has flexibility in announcing capital plans.

Some other finance companies like KeyCorp (KEY - Free Report) and Zions Bancorporation (ZION - Free Report) have also been exempted from the Federal Reserve's annual stress tests.

Given SunTrust’s solid liquidity position, earnings strength and lower debt level, it will likely retain its improved capital deployments and continue enhancing shareholder value moving ahead.

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